Polyethylene makers have won a hard-fought price hike, increasing prices on high density, low density and linear low density PE by 3 cents per pound.
PE producers and buyers cited tightened ethylene supplies and producers' determination to improve profit margins. Similar increases failed throughout 1998 as prices dropped an average of 12 cents per pound.
``With inventories down on ethylene, that gave [PE makers] the push they needed to get the 3 cents through,'' a Virginia-based buyer said.
Ethylene inventories recently reached the five- to seven-day mark — a level similar to past shortages, according to Roger Schwartz, global PE business manager for Dow Chemical Co. of Midland, Mich. Dow ranks as North America's largest LLDPE maker and second-largest LDPE maker.
Ethylene supplies should remain tight until 2001 when BASF Corp., Fina Oil and Chemical Co. and Formosa Plastics Corp. USA are each scheduled to start new crackers, according to Robert Bauman, vice president of consulting firm Chem Systems Inc. in Tarrytown, N.Y.
``Any upset in cracker production could wreak havoc in ethylene supply,'' Bauman said.
PE sales remained strong in December, according to the Society of the Plastics Industry Inc. in Washington. Monthly LDPE sales for December were almost 10 percent higher than sales for December 1997. LDPE and LLDPE sales were up more than 5 percent in a similar comparison, said SPI.
Supplies also were tightened by Equistar Chemicals' closing of an HDPE plant in Port Arthur, Texas, and Chevron Corp.'s temporary shutdown of an HDPE line in Orange, Texas. Equistar has not indicated when the Port Arthur plant will reopen. Chevron plans to reopen the Orange line when a 250-million-pound expansion comes on line in April.
Major PE makers have followed up the success of the 3 cent increase with a series of 5 cent moves set for March 1.